EU executive, banks agree on account switch code

The European Commission endorsed a set of principles on Monday that banks will introduce in November 2009 to make it easier for customers to switch accounts and find a cheaper service.
The European Union executive had threatened to regulate unless banks come up with a code that was effective across the 27 member states.
"I am pleased that the European banking industry took up the challenge of self-regulating on this important initiative for European citizens," EU Internal Market Commissioner Charlie McCreevy said in a statement.
"I believe that, once implemented by all European banks, the principles will increase mobility and stimulate competition," McCreevy said.
EU Consumer Commissioner Meglena Kuneva said 56 percent of European consumers report that they paid a lower price, for services such as direct debits and standing orders, when they switched banks.
The principles were drawn up by the European Banking Industry Committee (EBIC), made up of banking associations, and relate to switching accounts only within an EU state.
"The European banking industry is confident that the EBIC common principles will substantially benefit Europe's consumers," EBIC Chairman Giuseppe Zadra said.
Consumer groups said they will monitor the code closely.
"This is a first step. Banks have to prove their code will work and make it really easy for consumers to switch banks," said Monique Goyens, director general of EU consumer rights lobby BEUC.
The principles lay down several steps:
— if a consumer wishes to change bank, the new bank will act as the primary contact point and offer its assistance throughout the switching process;
— the new bank will deal with the old bank, ensuring that the transfer of the consumer's recurrent payments, such as direct debits and standing orders, is done smoothly and rapidly;
— the new bank will also either help the consumer to inform the relevant third parties, such as utilities providers, about the new bank account details or do that itself;
— the new bank will assist the consumer in closing the old account and transferring the remaining balance to the new account;
— the old bank will generally not charge the consumer for providing standard information about the consumer's recurrent payments. The Commission expects the switch to be generally free of charge;
— the old bank has to provide all the available information about the consumer's recurrent payments within seven banking days. The new bank has to set up recurrent payments on the new account within seven days of receiving these details.